What are the fees associated with margin trading?

The BitMarket.pl exchange charges the following fees for margin trading:

Fee for opening a position

The level of this fee depends on the turnover in your account and ranges from 0.15% to 0.00% (this is the so-called Market Maker fee). The fee is charged on the amount used to open a position. If you open a short position (borrow bitcoins from us to sell them for PLN), this is a percentage of the amount of bitcoins sold. If you open a long position (borrow PLN from us to buy bitcoins), this is a percentage of the value of bitcoins bought.

The fee for opening a position is charged only on the amount actually used to open a position. The fee is always charged in bitcoins.

Fee for keeping a position open

This fee depends on the current interest rate on the market for swaps which provide liquidity you borrow to open a position. The fee is levied on the amount actually used to take a position and is charged on a pro rata basis every minute. If a position has not been opened in full, the fee is charged only on the portion of the borrowed amount which was actually used. Also this fee is always charged in bitcoins.

Fee for closing a position

The level of this fee depends on the turnover in your account and ranges from 0.45% to 0.30% (this is the so-called Market Taker fee). The fee is charged on the amount actually used to close a position. If you close a short position (buy bitcoins back to return the funds you borrowed when you opened a position), this is a percentage of the amount of bitcoins you bought back. If you close a long position (sell bitcoins to return PLN you borrowed when you opened a position), this is a percentage of the value of bitcoins sold. As the previous fees, this fee is always charged in bitcoins.

How fees are charged

Fees are deducted from the amount you put up as collateral when you opened a position. This means that fees reduce your profit on a given position and they will be accounted for when you close your position.

Example of how fees are charged

Let’s assume that your account incurs a Market Maker fee of 0.10%, a Market Taker fee of 0.40% and the fee for keeping short positions open is 0.03% per day. You open a short position for PLN 10000 at PLN 2000 per bitcoin with a leverage of 1:4. The order is executed only in one half, which means that the following fees will be charged:

Fee for opening a position: 0.10% of the amount used to open a position, namely 2.5 BTC. The fee will therefore amount to 0.0025 BTC.

Fee for keeping a position open: 0.03% per day of the amount used. Since your order could only be executed in one half, i.e. you sold 2.5 BTC out of 5 BTC you borrowed, then the fee will be 2.5 BTC x 0.03% = 0.000750 BTC. This fee will be charged once a minute, which means that every minute 0.0000052 BTC will be collected.

Let’s assume that over a two-day period the price dropped to PLN 1900. When you close the position:

You will buy bitcoins back for PLN 5000 (you managed to get this much when you opened your position), which at PLN 1900 per bitcoin works out to 2.63157894 BTC.

A fee of 0.40% of that amount will be collected, i.e. 0.01052631 BTC.

You will give us back 5 BTC you borrowed: 2.5 BTC you did not manage to sell when you opened you position and 2.5 BTC out of bitcoins you bought back. You are left with a surplus of 0.13157894 BTC.

In the end, you were charged 0.0025 BTC for opening your position, 2 x 0.000750 BTC for the two days your position was held open and 0.01052631 BTC for closing your position. In total, the fees amounted to 0.01452631 BTC.